6 ms·

I don't understand, why is it that it costs less than $1 in countries in Asia for a GB of mobile data but costs ~$15 for the same in the United States? Can som

I don't understand, why is it that it costs less than $1 in countries in Asia for a GB of mobile data but costs ~$15 for the same in the United States? Can someone with knowledge of the industry please explain the reasons for this discrepancy to me?

otoburb 6y ago
Demand and supply. Clearing prices are higher in the US for a variety of reasons.
Yetanfou 6y ago
Maybe the word 'cost' is not the right term, better would be to talk about 'price'. The price is as high as the market will bear, clearly people are used to paying more for data in the USA and as such there is less incentive to bring down prices. The actual cost - as in what it costs to send data from A to B inside a carrier network - does not vary much between countries and can even be higher in some of those countries where retail prices are lower than in the USA.
inetknght 6y ago
Rent. American businesses love extracting rent.
- jeppesen-io 6y ago
  ALL businesses do
- Gibbon1 6y ago
  In the US Jevons paradox is in play with debt and rents. Baumol's cost disease also means debt and rents are slowly snuffing out other types of economic activity.
  - inetknght 6y ago
    You've got a bunch of buzzwords to describe why telcos in America fleece customers. Make it simpler for the rest of us, would you? Rent isn't a good thing here.
    - Gibbon1 6y ago
      It's exceeding obvious, capital is cheap. The means the finance industry uses more of it. They use it for rent seeking shenanigans that wouldn't make a return if it were higher priced. The problem is increased rent extraction reduces the return on economic activities that require real investment. Because the cost of labor and rents are too high to compete with aforementioned shenanigans. Simple simple simple.
- cscurmudgeon 6y ago
  Salaries are much higher in the US. Don’t reduce complex economics to simplistic sound bites. Look up PPP.
  - cscurmudgeon 6y ago
    Downvoted without any argument for a valid counterpoint. This site is going downhill with low information posts.
jzwinck 6y ago
Cellular service clearly can be delivered more cheaply in poor countries. Telenor for example is Noweigian (very wealthy country) but offers service at lower prices in Myanmar. One reason is labor costs. Imagine how much it costs to build and maintain one tower in Norway with its high standard of living for everyone vs in Myanmar where people will work for much less, and with lower safety standards. And obviously providers will charge more if they can, less if they have to.
- MAGZine 6y ago
  Can you point to a source that says labour costs are the reason for high Telco prices? The ongoing maintainence of a tower seems like it would be fractional to operational cost.
  - jzwinck 6y ago
    Of course towers are a fraction of operating expenses. It was just an example of one piece of the puzzle. All labor costs in Myanmar are far lower, from marketing to lawyers to retail store staff. And as I said, there are other reasons such as consumer surplus (rich people can pay more, so they do).
- jeppesen-io 6y ago
  And cost of land and permitting
  - deleted 6y ago
    [deleted]
- skylanh 6y ago
  As an extension to this comment, other costs that could impact the delivery price of 1GB of total usage: - speed - overall saturation of tower (# users per tower) - population density (full coverage of an area may be difficult) - technology; https://en.wikipedia.org/wiki/Comparison_of_mobile_phone_standards https://en.wikipedia.org/wiki/Comparison_of_mobile_phone_sta... which could affect federal regulatory licensing costs, technology licensing and acquisition costs and competitiveness of market to provide technology, tower density, total user capacity This is my laymen's interpretation. For instance, to blanket the US (9.834 million km² and 36 people per Km2) in LTE would be a significantly harder challenge then blanketing Myanmar (676,575 km² and 83 people per Km2) or even Norway (385,203 km² and 15 people per Km2). Just look at the stats for Myanmar, 86 people per Km2, and I might be able to get most of them within 300-500k km2. My subscriber base is excellent!
masklinn 6y ago
They make you pay what they can.
rsynnott 6y ago
Beyond the usual arguments about "the US is big", poor competition is probably a big part of it. US telcos have a lot of lockin, with very long contract lengths, poor acceptance of prepaid plans, and "family plans" being common. All of this makes it less likely that people will move network, so there's less incentive for telcos to actually compete on price. EDIT: On the "US is big" point, it's notable that pricing doesn't really follow population density in Europe. The UK has four times the population density of Ireland, but only fractionally cheaper data. Germany has similar population density to the UK, but far more expensive data (though I wonder are they looking at all extant contracts or something; data recently got a lot cheaper in Germany). All three countries have comparable household earnings. Sweden has a third the population density of Ireland (less than a tenth that of the UK!), slightly higher average data cost, _cheaper_ minimum data cost, and comparable household earnings. In general, any attempt to explain this via recourse to population density, income or GDP fails in the developed world.
- AmericanChopper 6y ago
  Having lived in a couple of developing Asian countries, there’s a few obvious reasons that the services would be cheaper. For starters, everything about doing business is cheaper, especially salaries. Unreliable service is completely normal. There’s also additional income streams for service providers. Getting spam SMS tailored to your nearest cell tower (like special offers for nearby restaurants) is completely normal. HTTP content is much more common place, and it all has ISP injected advertisements. Service coverage is also much worse, tourist areas have the best coverage, followed by business districts.
  - jeeeeb 6y ago
    That may be the case for some countries but it doesn't really explain the difference between the US/Canada and Europe or Australia.
    - AmericanChopper 6y ago
      If you looked into comparing the services from any two different countries, you’ll find completely different sets of market and geographical circumstances. The costs of providing the service will be different, the actual service provided will be different, and the demand from consumers will be different. If you compare Australia and New Zealand for instance, there’s some very obvious factors that could explain that difference. Australia has a lot more outbound submarine bandwidth than New Zealand has, with New Zealand also being much further away from the rest of the world. Most of Australia has either no service or terrible service. New Zealand has approx the population of Sydney, while having more than 20x the land area. Australia has about 5x the population of New Zealand, so all of your fixed prices per customer are going to be less in Australia. For any two countries you’re going to get an incredibly long list of factors that influence price. Population density seems like it should have a significant impact on the cost of building and maintaining mobile infrastructure for example. The US has close to 10x the population density of Canada, and Europe has over 3x the population density of the US, which I would expect is a non-trivial contributor to the reason that Canada is more expensive than the US, which is more expensive than Europe.
polack 6y ago
You need to build coverage for a huge portion of the population to get a license in many western countries. So all customers in the less densely populated countries have share that cost. There is also strict requirements on uptime and huge fines for telcos in western countries if the service goes down, even for just a moment. Needless to say that creating a resilient network costs a lot more.
devonkim 6y ago
The chart is potentially misleading because it only focuses upon the dimension of transfer when markets can be based upon speed. South Korea oftentimes has tiers of data based around speed rather than a cap or aportionment, which is part of why its cheapest 1 GB is less than 1/4 of what it is in the US but seems comparable. My point is mostly that level of service is another dimension that is hidden from the chart that should be quantified to better understand the underlying trends.
maxerickson 6y ago
A lot of it is that people pay $15 for the 1 GB in the US. (and $80-100 for the big bucket)
missedthecue 6y ago
Purchasing power parity. Median incomes in the US are far more than 15x what they are in countries like India, Pakistan, or Indonesia. Median income India - $2k Median income USA - $60k
- HJain13 6y ago
  While I agree with your logic, a small correction: for India the data you found would probably be per capita and for USA its per household (which I think constitutes 3 or 4 members). So something like 10x difference
adventured 6y ago
> costs ~$15 for the same in the United States I'm not sure where you get $15. The linked site says $8: "with 1GB costing an average $12.55 in Canada and $8.00 in the US." Nor do I get why you think all of Asia is inexpensive. South Korea is far worse than the US, despite a far lower median income, at $10.94 average. If you adjust that to the US, it's more like $24 (200% higher than the US). And Japan is fairly bad vs global prices as well when adjusted for income levels (around $6 to $6.50 equivalent in US terms). Why are US prices higher than they should be? Two primary reasons. First, the two big telcos initiated (and held) the market at a very high price point from inception. The US was the first large cellular and smartphone market. It has taken limited competition, primarily in the form of T-Mobile, more than a decade to drag those high prices downward. Second, wealth / income adjustments. Consider the Ukraine example. The US has ~20 times the GDP per capita of Ukraine in a typical year. Their $0.46 cost is comparable to more like $9.20 with a US adjustment, which is higher than the US cost. US median disposable incomes are among the highest, only comparable to smaller affluent countries like Australia, Sweden, Norway, Denmark and Switzerland. You also can't sell 1gb for $10 in Ukraine, it's not a very good business model. The people can't afford those prices. The telecom operators in countries like Ukraine do not make very much money selling mobile plans. Most telecom operators around the world operate at very thin margins with low profits. Verizon by itself generated $30.4 billion in operating income in 2019. AT&T generated $29.4 billion in operating income. T-Mobile generated $5.7 billion in operating income. So between the three US telecom operators, that's $65.6 billion in operating income every year (best compared to Apple or Microsoft in size). The entire rest of the world has nothing remotely like that profit bonanza, outside of a select few large operators.
scarface74 6y ago
I’m not sure about the other two, but T-Mobile has an unlimited data plan that is $40 a month for unlimited everything for a phone and $20 month unlimited for tablets if you have at least one phone on the plan. They don’t throttle you but they do prioritize your data over 50GB. I’ve never seen it happen. But because you can’t just add more wires to the airwaves, there is a limited amount of bandwidth no matter what you do. So that’s fair. They offer unlimited tethering still 512Kbps.
geodel 6y ago
As someone work in that industry, I see that one huge cost is people (including me) working there. So first step will be eliminate or convert these millions or so jobs in telecom industry which currently offer middle class living to about or below subsistence level. Another will be to bring down quality of service level. A couple of years back I was india and area where my mother lived had service down for like a week. That area must have a population of at least few 100Ks. Third to have very little customer service staff. People here have legitimately said why the hell do I care about 1000s of customer service/call center staff. I want my service cheap. In countries like India they have done that. Social media call these companies evil but I think they are just trying to run cheap service. Fourth is to spend much less on network equipments and field testing. Service is announced at much cheaper price point but backend systems are severely overloaded so one gets much more network/call drops.
- donmcronald 6y ago
  > Third to have very little customer service staff. People here have legitimately said why the hell do I care about 1000s of customer service/call center staff. I want my service cheap. In countries like India they have done that. Social media call these companies evil but I think they are just trying to run cheap service. In Canada they do that and keep the extra profits. Koodo is one of Telus’ flanker brands (for the illusion of competition) and even though they’ve increased phone and plan pricing a fair bit over the last couple of years they’ve gotten rid of the ability to directly call customer support. The Canadian government has been promising us action in the mobile industry for ages, but year after year after year our prices go up and up and up.
- distances 6y ago
  I'm sure you've read some of the other comments, but none of this explains the massive price difference to Western European market. It's all about lack of competition due to lack of consumer friendly regulation. A good starting point would be legislation that Israel enacted to get competitive markets as described by rvp-x: > - Ban on SIM-locking of phones to one provider > - Allowing users to change providers without losing their phone number > - Ban on "exit penalties" for customers leaving a contract > - Forcing existing infrastructure providers to share their infrastructure with virtual or not-yet-fully-deployed new providers
rvp-x 6y ago
Israel managed to significantly lower the rates with the introduction of the following changes: - Ban on SIM-locking of phones to one provider - Allowing users to change providers without losing their phone number - Ban on "exit penalties" for customers leaving a contract - Forcing existing infrastructure providers to share their infrastructure with virtual or not-yet-fully-deployed new providers
- fellellor 6y ago
  The same points hold for India as well. We’ve never had SIM locking and exit penalties and have had number portability for quite a long time. Cellular infrastructure though was handled by “non public facing” companies, owned by consortiums of telecom companies. With the entry of Reliance Jio, these companies joined hands to lock Jio out of their networks. For quite some time, cross network calls would be of very poor quality or almost impossible. Things have improved a lot since then. However, it’s great the Israel has made it possible for infrastructure to be shared as a utility, allowing new players an easier entry. That will keep things competitive for a long time.

otoburb 6y ago

Demand and supply. Clearing prices are higher in the US for a variety of reasons.

Yetanfou 6y ago

Maybe the word 'cost' is not the right term, better would be to talk about 'price'. The price is as high as the market will bear, clearly people are used to paying more for data in the USA and as such there is less incentive to bring down prices. The actual cost - as in what it costs to send data from A to B inside a carrier network - does not vary much between countries and can even be higher in some of those countries where retail prices are lower than in the USA.

inetknght 6y ago

Rent. American businesses love extracting rent.

jeppesen-io 6y ago
ALL businesses do
Gibbon1 6y ago
In the US Jevons paradox is in play with debt and rents. Baumol's cost disease also means debt and rents are slowly snuffing out other types of economic activity.
- inetknght 6y ago
  You've got a bunch of buzzwords to describe why telcos in America fleece customers. Make it simpler for the rest of us, would you? Rent isn't a good thing here.
  - Gibbon1 6y ago
    It's exceeding obvious, capital is cheap. The means the finance industry uses more of it. They use it for rent seeking shenanigans that wouldn't make a return if it were higher priced. The problem is increased rent extraction reduces the return on economic activities that require real investment. Because the cost of labor and rents are too high to compete with aforementioned shenanigans. Simple simple simple.
cscurmudgeon 6y ago
Salaries are much higher in the US. Don’t reduce complex economics to simplistic sound bites. Look up PPP.
- cscurmudgeon 6y ago
  Downvoted without any argument for a valid counterpoint. This site is going downhill with low information posts.

jzwinck 6y ago

Cellular service clearly can be delivered more cheaply in poor countries. Telenor for example is Noweigian (very wealthy country) but offers service at lower prices in Myanmar. One reason is labor costs. Imagine how much it costs to build and maintain one tower in Norway with its high standard of living for everyone vs in Myanmar where people will work for much less, and with lower safety standards. And obviously providers will charge more if they can, less if they have to.

MAGZine 6y ago
Can you point to a source that says labour costs are the reason for high Telco prices? The ongoing maintainence of a tower seems like it would be fractional to operational cost.
- jzwinck 6y ago
  Of course towers are a fraction of operating expenses. It was just an example of one piece of the puzzle. All labor costs in Myanmar are far lower, from marketing to lawyers to retail store staff. And as I said, there are other reasons such as consumer surplus (rich people can pay more, so they do).
jeppesen-io 6y ago
And cost of land and permitting
- deleted 6y ago
  [deleted]
skylanh 6y ago
As an extension to this comment, other costs that could impact the delivery price of 1GB of total usage: - speed - overall saturation of tower (# users per tower) - population density (full coverage of an area may be difficult) - technology; https://en.wikipedia.org/wiki/Comparison_of_mobile_phone_standards https://en.wikipedia.org/wiki/Comparison_of_mobile_phone_sta... which could affect federal regulatory licensing costs, technology licensing and acquisition costs and competitiveness of market to provide technology, tower density, total user capacity This is my laymen's interpretation. For instance, to blanket the US (9.834 million km² and 36 people per Km2) in LTE would be a significantly harder challenge then blanketing Myanmar (676,575 km² and 83 people per Km2) or even Norway (385,203 km² and 15 people per Km2). Just look at the stats for Myanmar, 86 people per Km2, and I might be able to get most of them within 300-500k km2. My subscriber base is excellent!

masklinn 6y ago

They make you pay what they can.

rsynnott 6y ago

Beyond the usual arguments about "the US is big", poor competition is probably a big part of it. US telcos have a lot of lockin, with very long contract lengths, poor acceptance of prepaid plans, and "family plans" being common. All of this makes it less likely that people will move network, so there's less incentive for telcos to actually compete on price. EDIT: On the "US is big" point, it's notable that pricing doesn't really follow population density in Europe. The UK has four times the population density of Ireland, but only fractionally cheaper data. Germany has similar population density to the UK, but far more expensive data (though I wonder are they looking at all extant contracts or something; data recently got a lot cheaper in Germany). All three countries have comparable household earnings. Sweden has a third the population density of Ireland (less than a tenth that of the UK!), slightly higher average data cost, _cheaper_ minimum data cost, and comparable household earnings. In general, any attempt to explain this via recourse to population density, income or GDP fails in the developed world.

AmericanChopper 6y ago
Having lived in a couple of developing Asian countries, there’s a few obvious reasons that the services would be cheaper. For starters, everything about doing business is cheaper, especially salaries. Unreliable service is completely normal. There’s also additional income streams for service providers. Getting spam SMS tailored to your nearest cell tower (like special offers for nearby restaurants) is completely normal. HTTP content is much more common place, and it all has ISP injected advertisements. Service coverage is also much worse, tourist areas have the best coverage, followed by business districts.
- jeeeeb 6y ago
  That may be the case for some countries but it doesn't really explain the difference between the US/Canada and Europe or Australia.
  - AmericanChopper 6y ago
    If you looked into comparing the services from any two different countries, you’ll find completely different sets of market and geographical circumstances. The costs of providing the service will be different, the actual service provided will be different, and the demand from consumers will be different. If you compare Australia and New Zealand for instance, there’s some very obvious factors that could explain that difference. Australia has a lot more outbound submarine bandwidth than New Zealand has, with New Zealand also being much further away from the rest of the world. Most of Australia has either no service or terrible service. New Zealand has approx the population of Sydney, while having more than 20x the land area. Australia has about 5x the population of New Zealand, so all of your fixed prices per customer are going to be less in Australia. For any two countries you’re going to get an incredibly long list of factors that influence price. Population density seems like it should have a significant impact on the cost of building and maintaining mobile infrastructure for example. The US has close to 10x the population density of Canada, and Europe has over 3x the population density of the US, which I would expect is a non-trivial contributor to the reason that Canada is more expensive than the US, which is more expensive than Europe.

polack 6y ago

You need to build coverage for a huge portion of the population to get a license in many western countries. So all customers in the less densely populated countries have share that cost. There is also strict requirements on uptime and huge fines for telcos in western countries if the service goes down, even for just a moment. Needless to say that creating a resilient network costs a lot more.

devonkim 6y ago

The chart is potentially misleading because it only focuses upon the dimension of transfer when markets can be based upon speed. South Korea oftentimes has tiers of data based around speed rather than a cap or aportionment, which is part of why its cheapest 1 GB is less than 1/4 of what it is in the US but seems comparable. My point is mostly that level of service is another dimension that is hidden from the chart that should be quantified to better understand the underlying trends.

maxerickson 6y ago

A lot of it is that people pay $15 for the 1 GB in the US. (and $80-100 for the big bucket)

missedthecue 6y ago

Purchasing power parity. Median incomes in the US are far more than 15x what they are in countries like India, Pakistan, or Indonesia. Median income India - $2k Median income USA - $60k

HJain13 6y ago
While I agree with your logic, a small correction: for India the data you found would probably be per capita and for USA its per household (which I think constitutes 3 or 4 members). So something like 10x difference

adventured 6y ago

> costs ~$15 for the same in the United States I'm not sure where you get $15. The linked site says $8: "with 1GB costing an average $12.55 in Canada and $8.00 in the US." Nor do I get why you think all of Asia is inexpensive. South Korea is far worse than the US, despite a far lower median income, at $10.94 average. If you adjust that to the US, it's more like $24 (200% higher than the US). And Japan is fairly bad vs global prices as well when adjusted for income levels (around $6 to $6.50 equivalent in US terms). Why are US prices higher than they should be? Two primary reasons. First, the two big telcos initiated (and held) the market at a very high price point from inception. The US was the first large cellular and smartphone market. It has taken limited competition, primarily in the form of T-Mobile, more than a decade to drag those high prices downward. Second, wealth / income adjustments. Consider the Ukraine example. The US has ~20 times the GDP per capita of Ukraine in a typical year. Their $0.46 cost is comparable to more like $9.20 with a US adjustment, which is higher than the US cost. US median disposable incomes are among the highest, only comparable to smaller affluent countries like Australia, Sweden, Norway, Denmark and Switzerland. You also can't sell 1gb for $10 in Ukraine, it's not a very good business model. The people can't afford those prices. The telecom operators in countries like Ukraine do not make very much money selling mobile plans. Most telecom operators around the world operate at very thin margins with low profits. Verizon by itself generated $30.4 billion in operating income in 2019. AT&T generated $29.4 billion in operating income. T-Mobile generated $5.7 billion in operating income. So between the three US telecom operators, that's $65.6 billion in operating income every year (best compared to Apple or Microsoft in size). The entire rest of the world has nothing remotely like that profit bonanza, outside of a select few large operators.

scarface74 6y ago

I’m not sure about the other two, but T-Mobile has an unlimited data plan that is $40 a month for unlimited everything for a phone and $20 month unlimited for tablets if you have at least one phone on the plan. They don’t throttle you but they do prioritize your data over 50GB. I’ve never seen it happen. But because you can’t just add more wires to the airwaves, there is a limited amount of bandwidth no matter what you do. So that’s fair. They offer unlimited tethering still 512Kbps.

geodel 6y ago

As someone work in that industry, I see that one huge cost is people (including me) working there. So first step will be eliminate or convert these millions or so jobs in telecom industry which currently offer middle class living to about or below subsistence level. Another will be to bring down quality of service level. A couple of years back I was india and area where my mother lived had service down for like a week. That area must have a population of at least few 100Ks. Third to have very little customer service staff. People here have legitimately said why the hell do I care about 1000s of customer service/call center staff. I want my service cheap. In countries like India they have done that. Social media call these companies evil but I think they are just trying to run cheap service. Fourth is to spend much less on network equipments and field testing. Service is announced at much cheaper price point but backend systems are severely overloaded so one gets much more network/call drops.

donmcronald 6y ago
> Third to have very little customer service staff. People here have legitimately said why the hell do I care about 1000s of customer service/call center staff. I want my service cheap. In countries like India they have done that. Social media call these companies evil but I think they are just trying to run cheap service. In Canada they do that and keep the extra profits. Koodo is one of Telus’ flanker brands (for the illusion of competition) and even though they’ve increased phone and plan pricing a fair bit over the last couple of years they’ve gotten rid of the ability to directly call customer support. The Canadian government has been promising us action in the mobile industry for ages, but year after year after year our prices go up and up and up.
distances 6y ago
I'm sure you've read some of the other comments, but none of this explains the massive price difference to Western European market. It's all about lack of competition due to lack of consumer friendly regulation. A good starting point would be legislation that Israel enacted to get competitive markets as described by rvp-x: > - Ban on SIM-locking of phones to one provider > - Allowing users to change providers without losing their phone number > - Ban on "exit penalties" for customers leaving a contract > - Forcing existing infrastructure providers to share their infrastructure with virtual or not-yet-fully-deployed new providers

rvp-x 6y ago

Israel managed to significantly lower the rates with the introduction of the following changes: - Ban on SIM-locking of phones to one provider - Allowing users to change providers without losing their phone number - Ban on "exit penalties" for customers leaving a contract - Forcing existing infrastructure providers to share their infrastructure with virtual or not-yet-fully-deployed new providers

fellellor 6y ago
The same points hold for India as well. We’ve never had SIM locking and exit penalties and have had number portability for quite a long time. Cellular infrastructure though was handled by “non public facing” companies, owned by consortiums of telecom companies. With the entry of Reliance Jio, these companies joined hands to lock Jio out of their networks. For quite some time, cross network calls would be of very poor quality or almost impossible. Things have improved a lot since then. However, it’s great the Israel has made it possible for infrastructure to be shared as a utility, allowing new players an easier entry. That will keep things competitive for a long time.